Supplier Relationships Key to Pricing, Assortment Strategies

January 23, 2018

Specialtyfood.com

Maintaining strong retailer-supplier relationships is more important than ever at a time when food-cost inflation is rising alongside increased price competition, according to a panel of retailers at the Winter Fancy Food Show on Monday.

Richard Tarlov, owner of Canyon Market in San Francisco, said during the panel that he was meeting with wholesaler United Natural Foods Inc. immediately after the panel to discuss his store’s volume discounts.

“It’s a very serious meeting,” he said. “We rely on our relationships so that we can get preferential pricing and take advantage of every deal that is available to us.”

Retailers said specialty foods can provide a margin-boosting buffer against the competitive pressures on commodity-type items, particularly as hard discounters Aldi and Lidl are expanding.

“You have to get better and better and better at your data analysis,” said Tarlov. “If you are not going to mark up your dairy products at all, then how are you going to make up that margin?”

Jeremy Gosch, executive VP and chief strategy and innovation officer for Hy-Vee, which competes against Aldi in the Midwest, said retailers can’t afford to lose customers over the price differential on a gallon of milk.

“You are going to compete, because you can’t afford to lose that customer,” he said. “You are going to find avenues [to recoup lost margins] through specialty foods, or anything else you can.”

He also said specialty foods help differentiate Hy-Vee from competitors.

“For us, specialty food is as big a differentiator today as Kraft Macaroni & Cheese was 20 years ago,” he said. Jacqueline Ross, senior director of product development, innovation and integrity for private brands at Ahold Delhaize’s Retail Business Services division, said that company’s stores — which in many cases have been competing directly with Lidl in the Mid-Atlantic region — can differentiate themselves from the hard discounters by tailoring their assortments to local communities better than both Aldi and Lidl can.

“We are offering a more complete shop,” she said. “We tend to offer something different, and it makes for a different experience in out stores.”

Harley Butler, director of marketing at Shipt, the grocery-delivery service, said the company’s relationships with product suppliers, retailers, consumers and its independent network of shoppers/delivery personnel are all key to the company’s success.

Panel moderator Phil Lempert, The Supermarket Guru, asked panelists what they expected to take away from the Winter Fancy Food Show this year.

Ross of Ahold Delhaize said she has seen a lot of items that could fill positions in the company’s private label portfolio, especially in its Nature’s Promise natural and organic brand. “There are some things here that are quite new, and we have an opportunity to be first with some of those,” she said.

Lynn Hochberg, director of product innovation and implementation at convenience store operator Wawa, said she’s been able to validate some of the trends the company has already been mining.

“It’s hard to find the niche-ier ingredients, and this is a great place to do that,” she said.

Tarlov of Canyon Market said he sees the show as a valuable tool to gather intelligence abut the industry — not just abut upcoming trends, but also about those that may be nearing their expiration date.

“I talk to producers and ask them what products are they dropping, and why are consumers no longer buying that flavor?” he said.